Resource Based View in Canons Strategy - Case Study Example

Resource Based View (RBV) in Canon’s Strategy Introduction Canon is a multinational from japan which entered into business in the 1960s. The corporation deals with the manufacture of optical and imaging products ranging from cameras, printers, medical equipment and photocopiers (C1038). This paper examines Canon competitive advantage according to the Resource Based View (RBV). The paper looks at the resources and abilities that help Canon to sustain growth and maintain a competitive advantage. The essay starts with analysis of RBV and analyses Canon competitive advantages from the case study and literature. This will help in coming up with a comprehensive conclusion. Canon Resource Based View (RBV) According to Barney (1991), firm resources and capabilities are critical for business success. In fact, they help the firm in establishing long term focus and strategy (Wernerfelt, 1984). A firm is only bale to have a competitive advantage if it can implement a value creating strategy which is not being implemented by the competitors. Firm resources can be identified as tangible, intangible and human resources. To attain a competitive advantage, the firm is expected to have rare and non-imitable resources which cannot be substituted (Barney, 1991). To be able to attain profits from the resources, the firm has to establish a competitive advantage, sustain it and appropriate the returns from the competitive advantage. Canon has been able to use their resources to attain strategic growth. According to Priem and Butler, (2001), resources are a source of sustained competitive advantages through exploiting of strengths and responding to the external opportunities while eliminating external threats and avoiding internal weaknesses. To understand how to use resources and gain a competitive advantage, it is important to assume that all firm resources are heterogeneous and immobile (Barney, Wright and Ketchen Jr, 2001). Despite this, not all firm resources hold sustained competitive advantage. The resources are expected to be valuable, rare, imitable and not substitutable to help on sustainable competitive advantage (Barney, 2001). Canon has several resources which meets the criteria for a sustainable competitive advantage in the industry. Resources Canon has been able to establish as a market leader in the industry. The major resources for Canon are financial capacity and the decentralized research and development. Through innovation, it has been possible to grow their sales and earn higher profits (Hart and Dowell, 2011). The case study financial data shows that the firm has been able to apply the theory for strategic fit in all their products. The data shown is for 10 years and shows Canon strength for an entire decade (C1401). Financial capability is one of the most vital resources. It helps in creating, maintaining and enhancing sustainable competitive advantage (Peteraf, 1993). It is important to note that physical resources can be easily imitated in the market (Barney, 1991). With a lot of strong competitors in the market such as Xerox, cannon products such as cameras and photocopiers can be easily imitated. To ensure that they have a sustainable competitive advantage, Canon has been in the frontline to innovate on their products. This includes coming up with unique product designs which includes use of technologies such as RCA and the optical technology (C1042). According to Halawi, Aronson and McCarthy (2005), unique products have a strategic competitive advantage in the market hence creates barriers to increase in competition. Canon has one of the strongest financial capabilities in the market. Through product innovation and growth in sales and profit, Canon has been able to gain adequate revenue required for research and development. This has further enhanced the company’s revenue in the market. Through high investment in research and development, it has been possible for Canon to create unique products which are hard to imitate. Canon has been able to develop TV cameras and micrographic equipment which are hard to imitate by the competitors (C1048). In some cases, the firm has used technology which they do not license to other manufacturers making it hard for them to imitate. Canon patents and good reputation are intangible assets which cannot be imitated. The firm has been able to attain a lot of patents and innovations. The firm has also been able to build a strong reputation in the industries through their products and major advertisement campaigns. They have also invested time to know their customers and develop close and strong relationships (C1046). The firm ensures that they use campaigns which only include unique products and brands which help to further their reputation. Canon has been able to develop strategic alliances and joint ventures in various parts globally (C1047). This has helped in attaining the necessary technology, access markets and makes it easy to enter foreign markets (C1406). The firm uses a philosophy where they manufacture quality products using low costs, reduce inventory and eliminate waste while planning for materials and manufacturing. This has acted as an opportunity for Canon to earn higher profits. Through decentralized R&D, there have been developments of new Canon products. The firm have state of art research and development facilities which helps in coming up with new materials, electronics and information technology. The main research facility by the firm has centres in different countries (C1044). The workers are empowered to act and make quick decisions in the research and development departments. They are given opportunity to participate in the decision making by the business. The firm has been able to motivate the production workers through giving them a chance to offer feedback and also fix products. They also engage in group activities meant to help in solving problems that may occur in the production. The company also benefits from their leadership which is highly committed to innovation and development of new products (C1044). The company president has been very committed to ensure that Canon has a long term strategy which ensures success. With the resources at hand, it has been possible for Canon to come up with strategies which are suitable for their success. Capabilities Canon has the ability to maximize their resources and attain the desired outcomes. The management of the firms has been able to include all employees which have enhanced their resources. The firm has all equipment and facilities that are required for production and distribution which has enhanced their scale and scope for economies. This has led to economic profit and made it possible to finance business development. The company has focused on continuous research and innovation with an aim of coming up with new and revolutionary ideas. This has given them a competitive edge compared to most of the competitors such as Xerox. High investment in research and development funding makes it possible to have a sustainable competitive advantage (Eisenhardt and Martin, 2000). This can be seen in the case for Canon where the firm has been able to utilize technological innovation for a competitive gain. The company has patented resources and capabilities in technology which makes it easy to innovate. The collaboration with foreign firms has made it possible for Canon to benefit from knowledge transfer and also reduce the level of competition especially in Europe and United States. The firm has also invested high in new research to market (C1044). The firm has given priority to fast selling product lines among the many products (C1045). With their growth financially, Canon has been a major sponsor in major sporting events which has helped promote their brands and strengthen relations with main partners. Competitive strategy The main generic competitive strategy that has been adopted by Canon is differentiation. The firm has thus invested in technological capacity and knows how to outdo the competitors. According to Bowman and Ambrosini (2007), having unique resources and capabilities is a major way of gaining a competitive advantage. For Canon, this is in the fine optics, mechatronics and precision mechanics. Very few firms in the industry can match the competitive strategy for Canon through differentiation. This is aimed at coming up with state of art equipment which are of high quality compared to the competitors. The products are mainly as a result in investment in a decentralized Research and Development (R&D). The company engineers are given a chance to use their research findings and convert them to technological innovation. The state of art products by Canon have a better quality compared to those of the competitors. Despite the fact that Canon has attained success through low costs manufacturing they compete based on quality instead of low price. Unique products have differentiated the firm from the main competitors. Conclusion To sum up, Canon has been able to use their resources and capabilities to gain a competitive advantage in the industry. The major resources as identified in the essay are financial and decentralized research and development. The company has been able to succeed in the transfer of capabilities in the entire organization. It is evident that effective strategies used by Canon have led to development of unique and inimitable product line. This is in addition to a strong brand through strategic marketing and brand promotion. Canon has succeeded in improving their resource availability and addresses their weaknesses to ensure that they have a long term strategy for success. References Barney, J., 1991, ‘Firm resources and sustained competitive advantage’, Journal of management, vol.17, no.1, pp.99-120. Barney, J., Wright, M. and Ketchen Jr, D.J., 2001, ‘The resource-based view of the firm: Ten years after 1991’, Journal of management, vol.27, no.6, pp.625-641. Barney, J.B., 2001, ‘Is the resource-based “view” a useful perspective for strategic management research? Yes’, Academy of management review, vol.26, no.1, pp.41-56. Bowman, C. and Ambrosini, V., 2007, ‘Identifying Valuable Resources’, European Management Journal, vol.25, no.4, pp.320-329. Eisenhardt, K.M. and Martin, J.A., 2000, ‘Dynamic capabilities: what are they?’ Strategic management journal, viol.24, no.2, pp.1105-1121. Halawi, L.A., Aronson, J.E. and McCarthy, R.V., 2005, ‘Resource-based view of knowledge management for competitive advantage’, The electronic journal of knowledge management, vol.3, no.2, pp.75-86. Hart, S.L. and Dowell, G., 2011, ‘Invited editorial: A natural-resource-based view of the firm fifteen years after’, Journal of management, vol.37, no.5, pp.1464-1479. Peteraf, M.A., 1993, ‘The cornerstones of competitive advantage: a resource‐based view’, Strategic management journal, vol.14, no.3, pp.179-191. Priem, R.L. and Butler, J.E., 2001, ‘Is the resource-based “view” a useful perspective for strategic management research?’, Academy of management review, vol.26, no1, pp.22-40. Wernerfelt, B., 1984, ‘A resource‐based view of the firm’, Strategic management journal, vol.5, no.2, pp.171-180. Read More